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Depriciation problem

Others 582 views 1 replies

purchase price of machine 150000.installation harges 50000,residual value 81920,useful life 4 yrs,the amount of depriciation under wdv method will be

a).40000                                                                                                                                                           b).32000

c).25600                                                                                                                                                            d).20480

Replies (1)

Step 1: Find rate of depn. using the following formula

 

R= (1  -  n  s/c ) x 100 
             
Where R = Rate of Depreciation (in %), 
n = Useful life of the asset (in years) 
s = Scrap value at the end of useful life of the asset 
c= Cost of the asset
 
N.B. i cant get a square root sign. the formula must read 'n' root of 's/c'
 
using the above formula. u'll get the rate of depn as 20%.
 
Step 2: Apply rate in question
 
Add installation chgs to the cost and calculate depn @ 20%. You'll get 40000 as depn for the year.


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